Tax attributes of liquidating corporations jewish and black interatial dating
The shareholder’s basis is decreased (but not below zero) by the shareholder’s share of the S corporation’s items of loss and deduction, nondeductible expenses (except expenses that are not chargeable to the capital account), depletion deduction for oil and gas property, and distributions to the shareholder that are not made from accumulated earnings and profits.
Because the tax consequences of distributions depend on the shareholder’s basis, it is important to keep up with changes in the shareholder’s basis over time.
A shareholder’s basis in his S corporation stock is increased by the share of the S corporation income that is passed through to the shareholder.
This effectively gives the shareholder a credit to apply against the earned income when it is ultimately distributed to the shareholder, ensuring that the income is only taxed once.
The shareholder will also have two tax consequences from the liquidation.
This means that the normal distribution rules of Section 1368 do not apply to liquidating distributions.Because the income of S corporations is taxed to the owners when the income is earned, a mechanism is needed to ensure that the shareholder is not taxed again when the earnings are distributed.